Japan's market watchdog on Friday recommended the Financial Services Agency (FSA) fine Olympus Corp <7733.T> about 200 million yen ($2.5 million) for false accounting in one of the country's biggest corporate scandals.

The recommendation, made by the Securities Exchange and Surveillance Commission (SESC), was expected as part of legal procedures and comes after prosecutors last month charged the company and six key figures in the $1.7 billion accounting fraud.

The SESC said that the medical equipment and camera maker made false regulatory filings from the financial year ended in March 2007 through the first quarter ended in June 2011 by booking bigger investment securities and goodwill assets than the actual amounts.

The FSA will make the final decision on imposing the fine.

We take the SESC's recommendation seriously, Olympus said in a statement.

Olympus restated its balance sheet in December after an external investigation panel revealed that the firm had hidden investment losses off its books for 13 years.

Olympus itself is suing for mismanagement five of its eight internal directors, including the current president, and shareholders are set to vote on a new board of directors proposed by the firm at an April 20 extraordinary shareholders' meeting. ($1 = 80.9000 Japanese yen)

(Reporting by Taiga Uranaka, Writing by Yoko Kubota; Editing by Muralikumar Anantharaman)

Japan